Mitel's (NASDAQ:MITL) Growth Profile May Start to be Questioned

Although there are no certainties at this time as to Mitel's (NASDAQ:MITL) reason for continuing to underperform, it could be demand in the SMB market, but it's not for sure, and some investors may start to question the growth profile of the company.

UBS (NYSE:UBS) said, "Mitel's 3Q outlook was disappointing expecting sales of $157-$162M vs. Street expectations for - $162M. We believe the disappointing outlook is partly due to weak demand in the SMB market, however, some investors may begin to question Mitel’s growth profile with - 7 qtrs of flattish revs as some others have recovered...We now lower our estimates for CY10 and CY11 sales and EPS ex options to $645M (-2%) and $0.73 and $674M (+5%) and $0.83 versus our prior $650M (-1%) and $0.81 and $705M (+8%) and $0.94. 2Q sales and EPS ex options of $161M and $0.16 were below our forecast of $162M and $0.18."

Mitel closed Friday at $5.68, down by $0.72, or 11.25 percent. UBS lowered their price target on them from $7 to $6.50. Volume was about 8 times the normal 3-month daily average.

Mitel (NASDAQ:MITL) Lacks a Catalyst Short-, Mid-term

Saying there is nothing that can be seen that will jump start Mitel (NASDAQ:MITL) in the short-term or mid-term, Canaccord Genuity maintains their "Hold" rating on them in the midst of a tough SME market.

Canaccord said, "Consistent with the thesis from our Nov. 23 initiation, valuation relative to direct and broader technology sector comparables appears attractive, suggesting room for material upside provided the company returns to growth. However, near- to intermediate-term efforts to stimulate demand manifest in deleveraging. Coupled with a continued lack of “technology value” appetite among investors, we are without a catalyst to recommend accumulation."

Mitel closed Friday at $5.68, losing $0.72, or 11.25 percent. Canaccord has a price target of $8 on them. Volume for the day was about 8 times the normal daily 3-month average.